Think fast--name the three things most important to the success
of your business.

If cash management didn't make your list, you're not
alone. Most entrepreneurs think a lot more about sales and
marketing than the specifics of managing cash.

And really, who could blame them? The term "cash
management" is broadly enough defined so as to be perpetually
misunderstood. "People have a hard time describing it,"
says Joe Scharfenberger, head of small-business financial services
for Chase Regional Banking in New York City. "But cash
management is nothing more than cash in, cash accumulated and cash
out."

Sounds simple enough. Yet many business owners watch their
would-be-profitable companies teeter on the brink because they
don't have a handle on what's coming in and what's
going out of their corporate coffers. "Maybe, because these
things are basic, [business owners] assume they're being done;
but there are always surprises," says , CFO partner with professional services firm Tatum
Partners LLP in Chicago.

To help minimize surprises, assume no cash issue is too basic.
Here's a checklist to help keep you on track:

1. Know where you are and where you're going. All
good cash management begins with a thorough assessment of your
business's current cash position and the development of a
forecast based on that, says Jonathan Gassman, a partner with
accounting firm Gassman & Golodny LLP in New York City. This
should tell you whether receivables are being collected quickly
enough to pay vendors on time and whether you're optimizing
your float.

2. Analyze accounts receivable and payable. If a cash
position analysis turns up more cash out than cash in, the best
place to start is receivables. Zorko looks at receivables first
when he comes into a company to help with financial troubles.
Usually, he finds customers aren't paying for reasons the
entrepreneur had no knowledge of. Says Zorko, "It leads to a
discussion about product quality, service delivery or other things
not being done properly."

A glance at receivables may also remind you that you've been
shy about collecting, says Ira Davidson, director of the Small Business Development Center at Pace University
in New York City. Davidson counseled one business owner who showed
him nine months' worth of uncollected receivables. "He was
afraid to collect because they might not pay and he'd lose
customers," says Davidson. Collecting on time and sticking to
credit policies are critical to keeping the money flowing in.

3. Use your bank's tools. With an array of cash
management tools available, you never have to be in the dark again
about your cash situation. "The biggest mistake small-business
owners make is using only a checking account to manage cash,"
says Scharfenberger. He advises business owners to, at minimum, use
an interest-bearing money market account to park excess cash.

Gassman and Zorko both recommend limiting the number of accounts
at different banks. By consolidating accounts with one financial
institution, you can also negotiate more favorable loan terms.

4. Get thee a good CFO. The first step on the way out of
denial is admitting that you'd much rather be out selling than
crunching numbers--and then making sure you have the right person
to do that for you. Most entrepreneurs have accountants, who tend
to focus solely on tax minimization, or bookkeepers, who may not
have adequate training to handle more sophisticated corporate
finance. Says Davidson, "If [business owners] don't have a
financial VP, they really don't know the implications of what
their cash on hand means to their business at large."